SENIOR ADMINISTRATION OFFICIAL: I thought it might be
useful, I hope it's useful for you if I make myself available to answer
any questions you have on why we're here in Ukraine, and why the
President is here and what our objectives are. And before I take your
questions, let me just give you three reasons why we're here, and three
objectives that the President has for this meeting.

First, Ukraine's a very important country for the United
States. It's centrally located in the new Europe, it's a country the
size of France geographically, with a population of roughly 52 million
to 53 million, which is quite large, and by everyone's account, as we
look to the next century, strategically important for the United States
and for the rest of Europe. And the President is coming to express his
interest in building a new and strong relationship with Ukraine.

Second, Ukraine, by all accounts, is the third largest
possessor of nuclear weapons in the world, and Ukraine has committed
itself to a non-nuclear future under the trilateral agreement negotiated
by President Clinton with President Yeltsin and President Kravchuk a
year and a half ago. Ukraine has committed itself to giving up its
nuclear weapons. The trilateral agreement is well ahead of schedule.
Over 350 nuclear warheads have been transported from Ukraine to Russia,
and that process will be completed in 1996.

By the end of 1996, there will be no more nuclear weapons
in Ukraine; it's quite an achievement for the Ukrainian people and that
is something that the President talked with President Kuchma about at
the Budapest Summit, when the START I Treaty was signed into force.
Ukraine signed that treaty as a non-nuclear weapon state.

Third, the United States has supported Ukraine, President
Kuchma in its effort to reform its economy. And in the last year
President Kuchma has completely transformed the economic landscape.
This was a centrally planned economy for a long time. Among the
successor states of the former Soviet Union, it was the one country that
held on to command economics for a long time until last summer when
President Kravchuk decided that their future should be based on reformed
economics, an open capitalist system.

President Clinton, at Naples last summer, led the G- 7
effort to dangle a $4-billion carrot in front of the Ukrainians,
promising that if they did reform their economy, the G-7, the IMF and
the World Bank would respond with up to $4 billion in assistance; and I
believe more than $3 billion of that has already been pledged.

But since last summer there has been a fundamental economic
transformation here towards a reformed economic future. The United
States has responded with $700 million in economic assistance, and in
Nunn-Lugar assistance for dismantling. That makes Ukraine the fourth
largest recipient of American assistance anywhere in the world after
Israel, Egypt and Russia.

So, in sum, I would say this is an exceedingly important
relationship for the United States. It expresses our determination to
build American relations in the region not only with Russia, but with
this very large and important country situated outside of Russia.

If you think back over the last two years of the Clinton
administration's policy in the region, I think it's fair to say that
1993 was the year in which the President and the Secretary focused on
Russia; 1994, by contrast, was the year in which the administration
focused on Ukraine.

The President was here on January 12th of '94, very briefly
in an airport stop. He signed the trilateral statement in Moscow the
next day with the Ukrainian and Russian leaderships. In November of
this year, President Kuchma was in the White House for a state visit,
the first state visit by a Ukrainian leader to the United States. The
Secretary of State has been here on several occasions. Secretary Perry
has been here most recently to witness the destruction of Bear bombers
and nuclear weapons at an air base not far from here.

So we come here with a great deal of optimism about this
relationship. We come here having worked very hard over the last two
years to build one of the closest relationships the United States has
with any country in Central and Eastern Europe.

And all that's by way of introduction, and I'll be glad to
take any questions you have.

Q Are you on the record?

SENIOR ADMINISTRATION OFFICIAL: I'm ON BACKGROUND.

Q What issues will the two Presidents be discussing?

SENIOR ADMINISTRATION OFFICIAL: The two Presidents are
going to discuss the following issues: Number one, economic reform.
How can the United States and the West support the radical economic
reforms that President Kuchma has instituted over the last seven to
eight months, and we're doing that in a combination of ways. I refer
you to the fact that we are extending $700 million in assistance to
Ukraine, $350 million of that is for economic support. It is almost
entirely grant funding. It's quite unusual for a Western country to
have the majority of its aid in grants.

The United States, I think, is alone in the West in its
assistance program to this region in basing almost all of it on grant.
So what we're trying to do is support the process of privatization which
is going on, the privatization of Ukrainian state firms. There is a
U.S.-Ukraine Enterprise Fund that has been established, it was
established last summer, and that fund capitalized, I think it's $75
million, supports the creation of small businesses in Ukraine and lends
money to existing small businesses.

In addition to that, the United States has played without
question the leading role in the West in trying to garner international
economic support through the IMF, World Bank and the G-7. Ukraine was
just recently granted a standby credit of $1.5 billion by the IMF. So
it has received the same type of loan that Russia has also recently
received.

That's a quite extraordinary accomplishment if you think
about where Ukraine was a year ago today. I was here a year ago this
week, and Ukraine had not made the decision to reform economically. It
was well behind the Russians and the Balts, the Poles, the Hungarians.
But in just the last eight to nine months, as Kuchma has taken office,
has formed a new government, brought in a team of young economic
reformers who have had a lot of exposure to the West, they've done quite
well in moving forward and the international community has responded. I
think it's quite significant that they received the IMF standby credit
at the same time that Russia did.

So President Clinton has tried to lead within the G- 7 to
form a consensus that the West should respond to these economic reforms
with substantial assistance. As I say, he did that at the Naples
Summit. The United States then called for a G-7 summit especially on
Ukraine that was held last October 27th in Winnipeg, in Canada, and that
was a conference to promote international assistance to Ukraine. So
that's issue number one, economics.

The second issue is what we can do with the Ukrainians to
continue the process of dismembering the nuclear arsenal here -- nuclear
warheads that number in the thousands here that made Ukraine the third
largest possessor of nuclear weapons anywhere in the world.

Our Nunn-Lugar program is the expression of our commitment
to help them do that, and we have various programs underway here to help
them store fissile material, to help them dismember both bombers and
ICBMs, to ship the warheads, transport them in a safe manner by train to
Russia where, through a process of reverse engineering, they are
completely dismantled.

And as I said, when we signed the trilateral statement in
January, 1994, it was our expectation that this would take several years
to complete, and I'm pleased to say that we're well ahead of schedule,
and that this process should be complete by next year.

If you remember back to '91 and '92 when the Soviet Union
broke up and these countries emerged, there was deep concern in the West
about the future of this country for two reasons. One, a lot of people
in this country wanted to retain a nuclear arsenal and make Ukraine a
nuclear power. And, certainly, the United States and our Western Allies
did not want to see that happen.

Secondly, Ukraine had been the bread basket of the Soviet
Union; it's an enormously rich country in terms of its agricultural and
economic potential, but it was an economic basket case, because it was
the last of these countries in the western part of the former Soviet
Union to adopt economic reform.

And there was a lot of concern in the U.S. government, as
well as outside, that Ukraine might not survive its infancy as a nation
state because of its failure to reform economically. And we have been
very pleased to see that, over the last -- as I said, since last July
and August, President Kuchma has completely transformed the economic
landscape through his new government and his new policies, and the West
is now responding. So those are the two major issues.

Let me just add a third. The Russia-Ukraine relationship
is an extremely important relationship for both countries and a very
complicated one; fifty-two million people in this country, of whom 12
million are ethnic Russians. Russia was formerly a part of the Russian
Empire for 300 years, and has been associated with Russia in one way or
another for over 1,000 years. These two countries are linked
ethnically, historically, linguistically and for a lot of other reasons
economically and politically.

The Ukrainians have tried very hard to assert their sense
of independence while retaining close economic and political ties with
Russia. It's our opinion that President Kuchma has done that quite
skillfully. There are two major outstanding Ukrainian-Russian issues
beyond the nuclear weapons: The status of the Black Sea Fleet; this was
the fourth largest fleet of the Soviet Union -- how will they apportion
the assets of the fleet between the two countries. The second issue is
Crimea. Crimea had been historically Russian, was given to the Republic
of Ukraine in 1954 by Khrushchev, never expecting that Ukraine would
become an independent country.

Crimea is a strategically important part of the former
Soviet Union in the Black Sea area, and the Russians and Ukrainians are
conducting negotiations on both issues. They have managed to avoid a
crisis between their countries on both issues.

President Yeltsin has been supportive of President Kuchma,
and vice-versa. They have a fairly good relationship, but the two
countries have a lot of impediments in the way of a normal relationship.
The United States has been the middleman on the issue of nuclear
weapons. President Clinton stepped in, in late 1993 when the two
countries could not decide how the process of denuclearization would be
carried out, and he was the one who brokered this trilateral agreement
that will lead to Ukraine becoming a non-nuclear state by next year. So
that's the agenda for President Clinton and President Kuchma today.

Q What's your estimate of how many warheads remain?

SENIOR ADMINISTRATION OFFICIAL: The question is, how many
warheads remain in this country. I can't give you an exact figure; I'm
sorry. But I can tell you that over 350 have been transported out, and
that I think roughly over 1,000 remain. But let me try to get all of
you a better number on that when some of our experts who know the
subject better than I arrive.

Let me just explain under this trilateral arrangement, it
is a triangular process whereby Ukraine sends its nuclear warheads to
Russia, they are dismantled in Russia, the nuclear fuel rods that are
derived as a part of this process are then shipped back to Ukraine to
power Ukrainian nuclear plants.

That process, that third leg is funded by the United
States. We pay Russia for the fuel rods to be shipped to Ukraine;
that's our economic piece of the relationship.

Q What is it that the United States would like this
country to do now that it's not doing? From the description you've
given, it sounds as if the President is here to -- (inaudible) --
anything else.

SENIOR ADMINISTRATION OFFICIAL: I do think that one of the
prime objectives that the President has today is to express very clearly
his support for what has happened here --for denuclearization, for
economic reform, support for President Kuchma and his government, and
support for the process of reform.

This is a divided country politically, like many others in
the region. There are many in the Supreme Rada here, which is the
Ukrainian Parliament who do not agree with the policies of economic
reform.

There have been very heavy, strong political debates over
the last couple of years about what this country should become. And the
President is here to say that we support what the current government is
doing in taking this government in a westward direction, trying to
integrate it to become a member in the future of the OECD and the WTO
and the IMF, integrate it westward. And I should also mention, Ukraine
was the first country in this region to sign up fully to the Partnership
For Peace. And as we think about the issue of NATO expansion in the
future, we certainly want to make sure that Ukraine's interests are
considered in that, and that the geostrategic position of Ukraine, which
is quite critical in the process of NATO expansion and European unity is
fully considered.

So I think you're right in saying that the primary purpose
of this trip is to support a relationship that is working and that is
going quite well.

Q Is Ukraine now clearly the leading candidate among the
PFP nations for confirmation into NATO?

SENIOR ADMINISTRATION OFFICIAL: I wouldn't go that far.
We've made no decisions on which of these countries is going to be --
which of these countries is the leading candidate to become a member of
NATO. Ukraine itself has not decided if it's even interested in NATO
membership, unlike a lot of its Central European members -- the Visegrad
states.

Ukraine has a highly complex relationship, as you can
understand, with Russia and has not yet asked or requested consideration
for NATO membership. It has said that it wants to be part of the
process of bringing NATO closer to these countries through the
Partnership For Peace, so Ukraine has already participated in military
exercises under the PFP.

Q with Ukraine's enforcement of sanctions on the Balkan
States? Are you satisfied that their sanctions enforcement of the
Danube --

SENIOR ADMINISTRATION OFFICIAL: The question is, are we
satisfied with Ukraine's enforcement of sanctions in the Balkans.
Ukraine is part of -- has a contingent of troops that make up part of
UNPROFOR. That has been an ongoing concern of ours. There are a number
of problems with the sanctions regime in the Balkans, the sanctions
regime against the Serbs, and there are a number of offenders. And on a
couple of occasions, we've brought issues to the attention of the
Ukrainian government pertaining to sanctions enforcement.

Q Is there any hangover here from President Bush's visit
when he, as you know, discussed, made the speech that was widely seen as
an effort to urge the Ukrainians not to go off independently on their
own?

SENIOR ADMINISTRATION OFFICIAL: The question is, is there
a hangover from the famous, or infamous "Chicken Kiev speech" of July,
31, 1991.

Q That's not what you called it then.

SENIOR ADMINISTRATION OFFICIAL: (Laughter.) And the
answer is, I think that was a long time ago in history. That was even
before the attempted coup against Gorbachev. That came at a time when
Ukraine was a republic of the Soviet Union. Ukraine's been independent
for 3.5 years, and it's been a rocky road as an independent country.
And we have had, the United States had, initially, a fairly rocky
relationship with Ukraine. Throughout '92 and through most of '93, the
United States and Ukraine had a number of differences over the status of
the nuclear weapons. But in '93, the President decided to open up the
economic relationship and to try to continue to convince the Ukrainians
to denuclearize, and that policy was successful.

I think I can say with a certain degree of objectivity that
the objectives that the President brought to this relationship in
January, 1994 when he first visited here have been met. The economy is
reforming with the assistance of the United States, and they have
decided to become a non-nuclear country, which was our primary concern.

And so I think he arrives here today, I think with a
certain sense of accomplishment about the way this relationship has been
conducted and managed by the United States and Ukraine, and we think
that our national security interests, which were to see a reduction in
the number of nuclear powers in this region are being accomplished.

Kazakhstan gave up the last of its nuclear missiles two
weeks ago. Belarus will give up the last of its nuclear missiles
shortly in the next couple of months and Ukraine next year. That, I
think, was one of the primary foreign policy objectives anywhere in the
world in the Clinton administration back in 1993, and we are well on the
way to accomplishing that objective.

Q So the answer is no?

SENIOR ADMINISTRATION OFFICIAL: The answer is no. Yes,
thank you.

Yes?

Q To what extent does the economic support here and the
other efforts that we're making here serve as a model for what the
United States may be able to do for Russia if they continue to proceed
on their path?

SENIOR ADMINISTRATION OFFICIAL: I would say there is not
really a great distinction in my own mind about how Ukraine has fared
economically and how Russia has. For a long time, until about a year
ago, even eight, nine months ago, Ukraine was the lagger in terms of
economic reform, and Russia was the role model.

And when President Kuchma took office, I think he had a
very sensible view: we need to reform economically, but we need to
maintain close economic relations with Russia because of the historic
trading patterns and the dependency that both --that they have on each
other, and also because Russia has set a very good reformist course.

Russia, by and large, is the economic reform role model for
almost all the states in the western part of the former Soviet Union --
Ukraine, Belarus, Moldova, to name the three that are closest to Russia,
and the United States has absolutely nothing against a close
Russia-Ukraine economic relationship; in fact, we encourage it. As long
as Russia remains reformist, there's certainly no reason why we should
discourage close economic ties between Russia and Ukraine.

Q Can you talk a little bit about Chernobyl? The
Ukrainians have been looking for large sums of money from the West --
America to help them close Chernobyl by the year 2002.

SENIOR ADMINISTRATION OFFICIAL: That's right Chernobyl
remains the West's outstanding issue with Ukraine. This is not so much
a bilateral issue as it is a G-7 issue with Ukraine. You all know about
the lingering after-effects, environmental after-effects of Chernobyl in
Ukraine and Belarus; they're quite significant in health terms.

Chernobyl, itself, the reactor complex which comprises four
reactors, is a highly unstable environment, and there's a lot of concern
in the West and in Ukraine about the structure, the ability of the
structure to even hold up over the next couple of years.

So the G-7, a year and a half ago, started a discussion
with Ukraine on how we could work with Ukraine to shut down Chernobyl
completely. Just a couple of weeks ago President Kuchma publicly
committed himself to shutting down Chernobyl by the end of this decade.
He needs financial support to do that, because Chernobyl is important as
a source of energy for this region of Ukraine. And the G-7 came up with
a financial support package last summer at Naples which the Ukrainians
deemed inadequate. So there is a continuing discussion about this. We
have contributed, I think, $38 million, the United States, to this
multilateral effort to try to fund a close-down of Chernobyl and the
development of alternative energy sources for Ukraine.

Q come up now with some more money?

SENIOR ADMINISTRATION OFFICIAL: I think it's fair to say
this discussion is going to continue at Halifax before, during and after
Halifax. It's one of the more important issues that's going to be
raised at the Halifax Summit, and I don't think it's possible for
Ukraine to take this step without substantial Western support in the
form of grants and credits and loans, and that remains to be negotiated.
But we are hopeful that, with this latest public statement from Kuchma,
the Ukrainians now also share our sense of concern about the future
environmental dangers of keeping at least two of the units at Chernobyl
active, which is presently the case.

Q Would you describe the Kuchma-Clinton relationship? How
well do they know each other?

SENIOR ADMINISTRATION OFFICIAL: President Clinton has met
President Kuchma once, and that was last November during the state visit
to Washington, November 22nd and 23rd. When President Kuchma was
candidate Kuchma for President he came to Washington in April, 1994 and
met with Al Gore, met with Strobe Talbott and a number of others in the
administration. So we know him quite well.

Vice President Gore visited here last August to show
support for Kuchma three weeks after Kuchma took office, and Gore was
the first Western leader to visit Ukraine, and that was intended to be a
very strong signal of American support for Kuchma's agenda, which was
non-nuclear and pro-economic reform. So they developed, the two
Presidents, a good relationship, the President's been looking forward to
coming here.

Q About Chernobyl, is it figuring in the talks today, and
are they going to shut down completely, or just the two reactors?

SENIOR ADMINISTRATION OFFICIAL: Chernobyl will figure in
the talks today. It's an agenda item, and the intention is to shut down
all four of the rectors at the Chernobyl complex, not just the two of
them; all four of them -- to shut it down completely because of its
inherent instability.

Q You said they'll talk about Ukraine's --problem and
whether we're upset about it.

SENIOR ADMINISTRATION OFFICIAL: Ukraine, like Russia, has
expressed a concern about the CFE Treaty limits on the disposition of
its conventional forces with -- inside its own country. And as we have
with Russia, we have encouraged Ukraine to seek flexibility, to seek a
resolution of its problems within the confines, the parameters of the
CFE Treaty. And I would just take the opportunity to say that I'd just
like to reaffirm that's our policy with Russia as well.

I know there is some confusion about that stemming from the
press conference with Yeltsin yesterday. Our policy on CFE hasn't
changed. We still believe that both Russia and Ukraine should seek
adjustments within the parameters of the treaty. We do not favor either
country seeking adjustments outside the treaty. What I mean by that is
by breaking the treaty open and then attempting to renegotiate it.

Q Aren't the changes temporary? They cannot be permanent
on the base of the treaty?

SENIOR ADMINISTRATION OFFICIAL: The CFE changes? Well,
both countries -- and there are also a number of other countries in this
group -- want to adjust to what they feel are adjusting security
concerns, changing security concerns. And we have sympathy with both
Russia and Ukraine for their problems, but we do not believe the answer
is to go outside the treaty. So that will be the gist of what we say to
the Ukrainians today.